A string of global Hotel Chains including “Rotana”, “Meininger”, “Jumeirah” and “Six Senses” is waiting to enter the country in the next Two years, attracted by the growth prospects this market offers..
” If you look at the global situation right now, for these brands, China and India are the two largest markets”.
“Everybody continues to believe that India has the potential, no matter how bad the numbers look.” As these brands are already present in China, their current focus is on India. They are in exploratory stages to launch a mix of their portfolio, mainly in the mid-market segment.
Berlin-headquartered Meininger, owned by travel major Cox & Kings, is considering operating leases and management contracts in India, through tie-ups with unbranded hotels operating in good locations.
The company’s chief executive, says India is one market no one can choose to ignore. “It is still relatively ‘un-hoteled’ and the travel market is expected to double in the next seven-eight years from 850 million travellers. And since Indians by nature are price sensitive and value conscious, our philosophy will fit right in.”
While hotel management companies are upbeat about the Indian market, finding the right partner here is proving to be a challenge for them. According to Senior vice president for South Asia and Southeast Asia at Rotana Hotel Management Corp, choosing the partner has been tough after the company decided to enter India about two years ago. “By the time we made our entry into the market, things had slowed down. That has made us work a little harder.
It is difficult to find long-term partners in India and since a lot of developers come from a residential development background, they expect quick returns,” he says….which they are coming to terms with, slowly.
However, adds that India is extremely under serviced and “Rotana” is looking at opening 20 operating hotels in the next decade. The Middle-East hotel chain plans to focus on the mid-market segment in the country, looking at the significant growth potential.
According to HVS, mid-market brands make up 34.4 per cent of the proposed branded hotel supply between 2012-13 and 2017-18. However says, that it is currently a wait and watch situation for these companies and while they are charting plans for the country, their actual entry will only happen post elections.
Dubai-based Jumeirah Group, a member of Dubai Holding, had been in talks to open properties in Mumbai and Goa. But owning to the macro-economic scenarios, timelines to conclude deals are getting longer and harder.
The new hotel companies will also have to face stiff competition from existing Indian brands like Citrus and Keys which are on an expansion drive. Citrus Hotels and Resorts, for instance, recently added five hotels in new micro-markets in India.
Keys Hotels has a pipeline of 22 properties that are expected to open in the next two years. The company is also in talks for 80 new deals and expects 20 per cent of them to convert into management contracts.
Typically, a mid-market or budget hotel would cost around Rs 20-25 lakh per room and would be sustainable at max 100 rooms. And banks are open to lending to the new wave of projects..
“Even if they are lesser-known brands right now, but with a good micro-market, banks would be willing to lend,” says Deven Shah, senior vice president for debt capital markets at Kotak Mahindra Bank that lends to hospitality projects.
Project cost for a Mid-market OR Budget-hotel would be around Rs 20-30 crore, excluding the land cost which would not be very high in these locations, he says…